The current dislocation of commercial real estate in the United States is attracting its fair share of opportunistic and distressed asset funds. But when it comes to getting these types of assets into the hands of buyers, firms are mixed when it comes to the best way to get these deals done.

Online commercial real estate auction platform AuctionPoint, which is expanding with a recent strategic investment, indicates sales are moving to an online environment. Auction Point provides real estate brokers with a means of selling property at full market value. The recent investment, financial terms of which were not disclosed, comes from MySpace co-founder Tom Anderson, who will join the company's board of advisers and provide guidance on technological developments.

Tom's strategic investment is part of the company's nationwide growth into social media and viral marketing. It supplements the recent investment from online commercial real estate marketplace LoopNet.

“I believe AuctionPoint’s business model of bringing sophisticated technology to an otherwise traditional industry is a game changer,” Anderson said in a statement. “AuctionPoint is shaping how commercial real estate deals get done, and industry players are realizing that these new ways of doing business are essential to jumpstart the marketplace.”

According to commercial loan modification and short sale service provider Strategic Asset Services (SAS), other companies are not seeing the demand for brokers to act as in-betweens for commercial real estate sellers and buyers and see a diminished role for these players in the future market.

Investors are increasingly collaborating directly with borrowers to acquire interests in distressed commercial real estate.

“Often commercial real estate borrowers are able to negotiate a short sale or discounted note purchase,” said SAS executive vice president Kevin Levine in a statement. “But they lack the financial resources to consummate the transaction.”

Third-party investors are able to acquire control of the commercial property at a low price trough a short sale or discounted note price, according to Levine. By retaining the borrowers in the transaction, the investors preserve their continuity of management of the real estate and, in the case of an owner-occupied property, their continuing tenancy.

Dan Gorczycki, a managing director of Savills US, has the opposite view. "People are lending and the market is active, but the only people selling are those being forced to sell," he says, adding that mortgage brokers are needed right now more than ever because "people can't just pick up the phone" and get easy credit.

Write to Diana Golobay.

The mortgage finance industry is growing increasingly concerned that secondary market investors are not satisfied with the level of data available at the mortgage-level — at least that's the view of data providers that are creating strategic partnerships in order to unveil new platforms they hope will address the associated perception of risk and draw in more clients.

Equifax is partnering with CoreLogic, formerly known as First American CoreLogic, to provide a new data report for mortgage-backed securities (MBS) investors. With it, investors have access to up-to-date borrower credit scores and other credit data for non-agency MBS.

According to Equifax, the ABS Credit Risk Insight Direct provides performance on past mortgages, second-lien balances, delinquencies, monthly payments along with the credit scores.

"The prevalence of hidden risks, such as unreported second lien balances and loans mis-reported as owner-occupied at origination, underscore the need for solutions to help investors accurately value non-agency mortgage-backed securities," said Steve Albert, vice president of Equifax Capital Markets.

Credit reports are valid for 90 days from the date of the report and cannot be older than 90 days at the time of closing a mortgage. Equifax launched its Undisclosed Debt Monitor tool that watches borrower activity during that 90-day quiet period. According to Equifax, borrowers spent roughly $142m in car purchases in that 90-day window last year. These were transactions potentially overlooked by underwriters.

Being able to monitor credit performance is becoming the single most important tool in the life of a mortgage, from underwriting up to secondary, said a source at Equifax, the consumer data provider. And more firms are partnering to meet this new demand.

“Undisclosed debt is a growing challenge. It is the biggest issue in mortgage finance,” the source said.

To cure the problem, Equifax is working to provide more credit transparency to mortgage underwriters and investors.

Equifax isn’t the only one trying to help originators and investors cut down on risk. S&P Valuation and Risk Strategies, a statistics unit within the credit-rating agency, Standard & Poor’s, will provide individual loan-level information on US residential mortgage-backed securities (RMBS) through the 1010data platform. 1010data provides data warehouse and other services to the MBS market.

The S&P Valuation and Risk Strategies RMBS database includes originations details, delinquency status, current balance, current interest rate. The granular loan-level data includes static origination details, as well as delinquency status, current balance and the current interest rate. Investors can also tailor the new data around each individual loan with a MBS portfolio.

“Transparency is at the forefront of investors’ minds,” said Greg Munves, vice president, 1010data, “and the need to easily consume robust loan-level data to track market and portfolio exposure is a key concern.”

Write to Jon Prior.

Financial information services firm Markit added structured products to the range of instruments covered by its portfolio valuations service. It marks the latest effort to expand pricing analytics.

“We have extended our Portfolio Valuations service to include structured products in response to client demand," said Kevin Borrett, managing director of portfolio valuations at Markit. "This is an area where our clients and their custodians hold significant positions and have historically relied on a single source of counterparty marks."

Markit now provides valuations for a wide range of equity, currency and interest rate structured products including equity structured notes and swaps, short- and medium-term currency structured notes and swaps. Markit also offers pricing analytics on single-currency interest rate structured notes and swaps, inflation options and Securities Industry and Financial Markets Association (SIFMA) swaps.

Markit also rovides valuations for hybrid equity/currency structured notes and swaps, as well as quanto rates exotics including quanto constant-maturity swaps (CMS) caps and floors and quanto CMS spread options.

"We are pleased to be able to offer our clients reliable, independent marks and greater transparency for a number of structured products including equity and currency structured notes and swaps," Borrett said. "We will continue to expand our modeling and pricing capabilities with a view to offering full coverage of all derivative trades our customers may hold.”

Write to Diana Golobay.

In a letter today to ranking committee members in both the US Senate and House of Representatives, Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), said that his institution concludes that losses on private label mortgage-backed securities from 2005, 2006 and 2007 at Fannie Mae (FNM: 0.00 N/A) and Freddie Mac (FRE: 0.00 N/A) are directly responsible for the FHFA taking an oversight role in 2008.

Furthermore, credit losses on MBS investments in years prior to conservatorship will likely continue for years.

"Investments in private-label MBS were primarily responsible for eliminating Freddie Mac’s preconservatorship net worth of $27bn and played a significant role in the initial draws under the Preferred Stock Purchase Agreements," the letter states. "Given that Fannie Mae had less than half the amount of private-label MBS as Freddie Mac, the overall impact was similar but less severe."

In 2009, the government-sponsored enterprises' (GSEs) losses totaled $93.6bn, and draws under the preferred stock agreements associated with those losses totaled $66.1bn.

The letter should come as no surprise, as this area is the core business of the two GSEs. Since FHFA takeover, DeMarco said that underwriting standards have tightened accordingly. "Serious delinquency rates for the 2009 vintage are a fraction of the serious delinquency rates for the 2006-2008 vintages at comparable periods after origination," he reports.

Write to Jacob Gaffney.

The author holds no relevant investments.

The April summary report from government-sponsored enterprise (GSE) Freddie Mac (FRE: 0.00 N/A) demonstrates the balance sheet focus on assimilating delinquent loan purchases at the expense of profits, according to e-mailed commentary.

The aggregate unpaid principal balance of Freddie's mortgage-related investments portfolio grew by $3.9bn in the month, due to delinquent mortgage buyouts from Participation Certificate (PC) pools first announced in February.

The total portfolio size is back to year-end 2009 levels, but securities holdings are down $61bn to accommodate the loan purchases. Net production of Freddie pass-throughs this year — including the effect of the buy backs — is flat, according to Jim Vogel, a strategist at FTN Financial, a financial services provider for the investment and banking community.

"There is no visible return to a 'for profit' management of the securities portfolio, and we would not expect it to return until mid-third quarter at the earliest," Vogel writes.

Additionally, he notes it is unlikely Freddie or sister GSE Fannie Mae (FNM: 0.00 N/A) will greatly increase their portfolio holdings of Ginnie Mae, which continues to gain net issuance market share as the GSEs maintain slightly higher credit standards than in 2009.

The April figures on Freddie's delinquent buy-backs followed Q110, in which Freddie saw $1.3bn of loans repurchased by lenders due to the loans' failure to meet the GSE's standards.

A hearing on GSE oversight is scheduled for tomorrow at 2 p.m. eastern in the House Financial Services subcommittee on capital markets, insurance and GSEs. Federal Housing Finance Agency (FHFA) acting director Ed DeMarco is slated to testify.

Write to Diana Golobay.

Disclosure: the author holds no relevenat investments.

A ruling by the Eleventh Circuit Court of Appeals is giving the Federal Deposit Insurance Corp. (FDIC) broad-reaching powers to dispose of the assets of failed banks, according to Moody’s Investors Service.

In its latest credit outlook report, the rating agency said the ruling is likely to up the risk to bank-sponsored asset-backed securities (ABS), as recourse to compensation will be diminished, leaving involved parties little alternative than to sue the FDIC in instances of alleged grievance over the handling of these assets.

The appellate court ruled the broad receivership powers of the FDIC entitle it to marshal trust property of a failed bank. And by doing so, the ruling rejects a lower court’s preliminary injunction that barred the FDIC from selling the assets of Ocala Funding on the basis that the FDIC lacked jurisdiction to sell the assets.

The court ruling revolves around the Ocala asset-backed commercial paper (ABCP) program — a conduit providing warehouse funding for originating residential mortgages for the now-failed Taylor, Bean & Whitaker Mortgage Corp. (TBW).

According to the latest Moody’s report, TBW’s warehouse lender, Colonial Bank, held the collateral under a series of bailee letters from Bank of America (BAC: 7.29 -0.14%), which serves as Ocala’s trustee, collateral agent, custodian and depository.

The August 2009 failure of Colonial Bank cost the FDIC deposit insurance fund (DIF) $2.8bn and dragged Ocala Funding’s ABCP program into a “vortex” of financial woes, Moody’s analysts wrote in August 2009.

But the appellate court ruling does not settle the matter as BofA can still appeal. In the meantime, the Ocala investors are suing BofA for breach of contract in a Second Circuit district court. BofA also filed suit against Colonial, alleging it did not receive funds from Colonial, the proceeds of mortgage sales to Freddie Mac (FRE: 0.00 N/A).

The appellate court decision to allow the FDIC broad-reaching powers fuels Moody’s concerns about the FDIC’s proposed safe harbor protection for failed bank assets being transferred for securitization.

If the court ruling is ultimately upheld, it would give the FDIC the power to operate under the terms of these new regulations “with no recourse to the courts until completion of those procedures.”

As HousingWire previously reported, the FDIC is proposing a 5% reserve fund for residential mortgage-backed securities (RMBS) to cover potential put backs during the first year of the deal, rather than the prior 12-month seasoning requirement.

In addition, the FDIC will likely require disclosure of any competing ownership interests in secondary liens secured by the same property and held by the servicer or its affiliates. The proposals include a requirement that deferred compensation be paid only to the rating agencies, rather than all service providers.

Write to Austin Kilgore.

The author held no relevant investments.